I agree. I think they can work on a worldwide level also, and this may prove that.
In theory, everyone controls the standard and the limit, since everyone downloads the client and verifies the hash chain. If a block can not be verified by the peers, it is thrown out. However, nothing is stopping a different group from breaking away and starting their own hash chain and unique currency.
As far as trust goes, I am approaching it from a supply/demand perspective. If people are willing to exchange other currencies for Bitcoin, then Bitcoin has value and people have a measure of trust in it. People are doing that right now. If an error occurs, or vulnerability is found, then the exchange rate will fall to reflect that problem.
I am probably going to give Bitcoin a try today. I read in the forums that the software was using GTK libraries for a server, and that sounded a bit weird. But I guess its a young project and they are not using yet a server-client structure.
And going back to world wide voluntary fiat currencies (not only related to bitcoin) there is a problem for that, and it is trust. While a fiat monopoly currency works on goverment violence, a voluntary fiat currency its completely built on trust. And I know that at the end all value is subjective and all that, but because of the qualities of gold and its natural scarcity vs the reality of fiat currencies, fiat currencies are based a lot more in trust than any other tradable object. Way more. At the end gold is based on "natural" rules, while fiat currency is based on human rules.
A practical example: Imagine there are two comunities in different phisical regions using some kind of voluntary digital fiat currency. For years everything is ok, but at some point a community (lets call it A) is doing better and starts to have a lot more of this digital certificates than the other community (lets call it B). Now people from community B (after enjoying all the products manufactured from community A) dont want community A from coming and buying all their stuff, they want them for themselves. So community B breaks the currency system pact, and only allows the set of certificates in had of community B. Now community A has a lot of worthless bits. The temptation for doing this kind of stuff is very very strong when the communities are big enough and the numbers get very large. Add in there the expected demagoguery from politicians, and you have a big problem.
With gold that can not happen or at least its very very difficult. Because, in a extreme case, community B could even try to ban gold as a currency or something crazy, but A could still use it arround the world.
Also, controlling someones honesty is quite easy at a local level, but not so much when the thing gets too big. There is more incentive to cheat and print (but this would not be a problem of bitcoin, since its distributed).
For example, when Argentina had its "corralito" a bunch of voluntary fiat currencies appeared and worked very well. And they tried to make them work at a national level, but they did not. People did not trust them outside their near zone of influence (and for a good reason if you ask me). Also, during the XIII and XIX centuries in the USA, bank notes were widely accepted near their zone of influence and at face value, but would be accepted only at discount when they were used far from the issuing bank (they would also loose value if people suspected the bank was over-extending, but that is a different issue).
This is the main reason why, in my opinion, voluntary fiat currencies can work very well at a local level, but wont work outside the local level.
PS: Anyway, enough monetary policy and I am going to try bitcoin.
